Why Building Brand Equity is Important for Your Business

We are have often been asked what we do and when we respond with “We brand companies,” I am usually greeted with blank expressions or a look of confusion. So, now I respond with “I help to personify a product, service, or even entire company.”

To understand why is this so important imagine a scenario where your product is the most recognized and purchases fly off the shelf. You are able to maintain profitable prices despite the efforts of competitors to undercut you and distributors are knocking at your doors to distribute. Your customers completely “get” your product and understand exactly what you want them to think about at. Well, that’s the power of branding!

A brand is a singular idea or concept that your product conjures in the mind of your customer. Typically, it comes in the form of a name, tagline, logo design or a combination of all three and is intended to identify your product and clearly differentiate it from the competition. In other words, it’s the difference between an iPod and an MP3 player, Coca-Cola and a bottle of cola, a BMW and a Cadillac.

Brand equity is the value of the brand you have created. Probably the most renowned brand with the highest brand equity would be Coco-Cola. Consumers have strong emotional ties to Coca-Cola and are passionate about it. Remember the huge backlash when they changed the formula several years ago? They were forced to change back to their original recipe and name. That’s powerful brand equity!

Strong brand equity offers numerous competitive advantages:

  • It can help buffer the impact on sales during a sagging economy
  • It can help create demand for your product
  • It can reduce marketing costs due to increased brand awareness and loyalty
  • It offers you more leverage when bargaining with distributors and retailers
  • Strong brand equity facilitates the launch of (new) brand extensions because your brand already carries high credibility and awareness
  • Strong brand equity can help stave off price battles

In summary, strong brand equity helps achieve larger margins because the consumer becomes less price conscious helping you to get your expenses down with more cost effective marketing initiatives. This allows you to generate revenue through increased sales and higher price margins, while at the same time continually strengthening your brand’s competitive position by building the consumer’s positive perception of your brand.


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